A new product that young people have been flocking to lately is the prepaid card. These are reloadable credit cards that you can use to pay for just about anything.

What's so great about them?
Those who use prepaid cards especially like the cards because they help them budget and control their spending. Users like that when they think they've put a certain amount of money in, once it's gone, they're done spending, instead of getting a potential overdraft fee.

How much does it cost?
Prepaid cards generally cost around $3-4 to load and reload each time. Other fees include reloading money, ATM cash withdrawals, balance inquiries, making a purchase without enough money on the card, and monthly maintenance fees.

Prepaid cards also don't give the consumer the same amount of protection as other credit and debit card companies. Prepaid card companies do not have the same obligation that financial institutions have to disclose fees. This is because Federal law does not require them to provide the same protections for fraud and error resolution. And they might not have FDIC protection.

Long story short, prepaid cards seem like they're easier than regular debit cards, but their hidden fees can really add up. Be sure to go over the policies of the card and compare them to others before you purchase! Here's an interesting article detailing the 5 best and worst prepaid cards on the market.

Do you have any experience with prepaid cards? Tell us about it on Facebook, Twitter or in a comment below!

I see the benefit to these, but I would still avoid them because I don't see them being worth the fees.

Kyle Brown
on April 28, 2012 at 04:53 PM:

Prepaid cards are very convenient to use, but the amount of fees that they come with usually makes them much less appealing than debit or credit cards. With some banks instituting debit card fees, these are an increasingly viable option!